Bitwise Asset Management, a cryptocurrency index fund manager, plans to double its 30-person head count to build out its client services, education and analyst teams that serve advisers in the next six months thanks to a $70 million cash influx.
On Wednesday, Bitwise, now four years old, announced its latest funding round that pushes the firm’s valuation to $500 million. Bitwise will also leverage the new cash to build more products, but Chief Executive Hunter Horsley said the firm is prioritizing hiring to provide client service, education and analyst relationships to advisers. Bitwise currently serves more than 200 registered investment advisers, he said.
“It’s something that the [funding] round enables us to do faster and be able to provide at more scale,” Horsley said. “Our goal is to be the best-in-class partner to advisers that can help them navigate the space not just before making the investment decision, but after.”
Increasing adviser confidence in crypto assets is Bitwise’s overall mission, Horsley said. The firm plans to execute on that goal by providing advisers with a team of experts they can rely on for the next several years after they make the allocation, when they get questions from clients, and when there are sudden events in the market.
Although surveys show more advisers plan to increase their use or recommendation of cryptocurrencies over the next 12 months, Horsley is well aware that greater acceptance of crypto assets by advisers won’t happen overnight, he said, even with a Bitcoin exchange-traded fund.
Bitwise was one of the first companies to apply for a Bitcoin ETF with the Securities and Exchange Commission, in early 2019, but withdrew that application in January 2020. Bitwise is working on a Bitcoin ETF and will refile when the time is right, Horsley said.
While the industry buzz around a possible Bitcoin ETF seems like the golden ticket to getting more advisers bullish on crypto, Horsley said Bitwise’s current profitability has proven adviser adoption of crypto can happen without the wrapping of a Bitcoin ETF.
Assets under management at the firm increased tenfold year over year, crossing $1.2 billion at the end of Q1, according to the announcement. Horsley attributes the firm’s growth to its niche focus on investment advisers rather than focusing on the trader.
“A lot of the discussion in the crypto space today is from the perspective of a trader,” he said. “A lot of the space is designed around traders … Bitwise’s audience has a different relationship with their crypto investment, which is that they’re more long-term oriented.”
Bitwise has been busy recently dropping crypto products regularly for advisers to use to allocate client assets. In February, the company launched a DeFi index fund, the Bitwise DeFi Crypto Index Fund. In May, it launched the Bitwise Crypto Industry Innovators ETF , which tracks the Bitwise Crypto Innovators 30 Index of pure-play crypto equities. These new funds joined the Bitwise 10 Crypto Index Fund, as well as the Bitwise Bitcoin Fund, and the Bitwise Ethereum Fund.
The new funding will enable Bitwise to expand these products, and the names backing Bitwise are also expected to increase adviser’s adoption, Horsley said. “Some of the names from Wall Street getting involved in the company will help us affirm that advisers can trust having a relationship with us.”
New backers included Daniel Loeb’s Third Point, Daniel Och’s Willoughby Capital, Louis Bacon’s Moore Strategic Ventures, Paul Eisenstein’s Vetamer Capital, and Coinbase Ventures, as well as investors Henry Kravis and Stanley Druckenmiller.
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Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.